test of rally strength

I’m using the bounce to lighten the load and put some jingle in the jeans. We do have a double bottom in place, and it will hold until doesn’t. (How’s that for sharp analysis?) Each retest absorbs another layer of demand, and Katie-bar-the-door if another retest fails.

We’re still under 50EMA, 200 EMA, a series of lower highs, and breeched the 2003 bull uptrend. In other words, there is a lot of overhead resistance.

What drives stocks higher? Strong earnings, P/E-expansion, takeover premiums, buoyant social mood. Which of the above to we have aplenty?

There must have been something too that BSC trouble rumor Monday. The debt has been trading very heavy, and the BSC common’s action was a panic unload. The Fed’s coordinated action at the cusp (again), shows how precarious the system is. Bear Stearns is a Primary Dealer for the Fed and eligible for the Fed’s latest life-buoy [Term Securities Lending Facility]. It’s also no minor point that the Fed rescue starts right before the end of the quarter; just in time to clean up the balance sheets for reporting purposes. (Where’s Spitzer when you need him?)